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UNITED STATES SECURITIES AND
EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from toCommission File Number 1-7584

TRANSCONTINENTAL GAS PIPE LINE
CORPORATION

(Exact name of registrant as
specified in its charter)


|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 74-1079400
(I.R.S. Employer
Identification No.)
|                                                                        |  |                                                
|2800 Post Oak Boulevard                                                 |  |                                                
|P. O. Box 1396                                                          |  |                                                
|Houston, Texas                                                          |  | 77251                                          
|(Address of principal executive offices)                                |  | (Zip Code)                                     

Registrants telephone number, including area code (713) 215-2000

None
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x Noo

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes o Nox

The number of shares of Common Stock, par value $1.00 per share,
outstanding as of April 30, 2003 was 100.

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H (1)(a) AND
(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED
DISCLOSURE FORMAT.



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TABLE OF CONTENTS



|                                                   |                                                                   |                                                      |  |  |  |  |  | 
|-------------------------------------------------- | ----------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART 1  FINANCIAL INFORMATION                    
|                                                   | ITEM 1. Financial Statements.                                    
|                                                   |                                                                   | CONDENSED CONSOLIDATED STATEMENT OF INCOME          
|                                                   |                                                                   | CONDENSED CONSOLIDATED BALANCE SHEET                
|                                                   |                                                                   | CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS      
|                                                   |                                                                   | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                                   | ITEM 2. Managements Narrative Analysis of Results of Operations.
|                                                   | ITEM 4. Controls and Procedures.                                 
|PART II  OTHER INFORMATION                       
|                                                   | ITEMS 1. LEGAL PROCEEDINGS.                                      
|                                                   | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                        
|SIGNATURE                                         
|Certifications                                    
|EX-99.1 Certification Pursuant to 18 USC Sec. 1350
|EX-99.2 Certification Pursuant to 18 USC Sec. 1350



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TRANSCONTINENTAL GAS PIPE LINE CORPORATION
INDEX

|                               |                                                                      |                                                                                                   |    |      |   | 
|------------------------------ | -------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | -- | ---- | - | 
|                               |                                                                      |                                                                                                   |    | Page
|PART I. FINANCIAL INFORMATION: |                                                                      |                                                                                                   |    |     
|                               | Item 1. Financial Statements -                                       |                                                                                                   |    |      |  
|                               |                                                                      | Condensed Consolidated Statement of Income for the three months
ended March 31, 2003 and 2002     |    |      | 2 | 
|                               |                                                                      | Condensed Consolidated Balance Sheet as of March 31, 2003 and
December 31, 2002                   |    |      | 3 | 
|                               |                                                                      | Condensed Consolidated Statement of Cash Flows for the three
months ended March 31, 2003 and 2002 |    |      | 5 | 
|                               |                                                                      | Notes to Condensed Consolidated Financial Statements                                              |    |      | 6 | 
|                               | Item 2. Managements Narrative Analysis of the Results of Operations |                                                                                                   |    | 20   |  
|                               | Item 4. Controls and Procedures                                      |                                                                                                   |    | 26   |  
|PART II. OTHER INFORMATION     |                                                                      |                                                                                                   | 27 |     
|                               | Item 1. Legal Proceedings                                            |                                                                                                   |    | 27   |  
|                               | Item 6. Exhibits and Reports on Form 8-K                             |                                                                                                   |    | 27   |  

Certain matters discussed in this report, excluding historical information,
include forward-looking statements. Although Transco believes such
forward-looking statements are based on reasonable assumptions, no assurance
can be given that every objective will be achieved. Such statements are made
in reliance on the safe harbor protections provided under the Private
Securities Litigation Reform Act of 1995. Additional information about issues
that could lead to material changes in performance is contained in Transcos
2002 Annual Report on Form 10-K.

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PART 1  FINANCIAL INFORMATION

ITEM 1. Financial Statements.

TRANSCONTINENTAL GAS PIPE LINE CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Thousands of Dollars)
(Unaudited)

|                                     |                                                                          |                                           |        |                    |         |      |        |         |         | 
|------------------------------------ | ------------------------------------------------------------------------ | ----------------------------------------- | ------ | ------------------ | ------- | ---- | ------ | ------- | ------- | 
|                                     |                                                                          |                                           |        | Three Months Ended
|                                     |                                                                          |                                           |        | March 31,         
|                                     |                                                                          |                                           |        |                   
|                                     |                                                                          |                                           |        | 2003               |         | 2002
|                                     |                                                                          |                                           |        |                    |         |     
|Operating Revenues:                  |                                                                          |                                           |        |                    |         |      |        |        
|                                     | Natural gas sales                                                        |                                           | $      | 159,587            |         |      | $      | 87,471  |        
|                                     | Natural gas transportation                                               |                                           |        | 202,329            |         |      |        | 174,525 |        
|                                     | Natural gas storage                                                      |                                           |        | 31,821             |         |      |        | 35,432  |        
|                                     | Other                                                                    |                                           |        | 3,538              |         |      |        | 2,904   |        
|                                     |                                                                          |                                           |        |                    |         |      |        |         |        
|                                     |                                                                          | Total operating revenues                  |        |                    | 397,275 |      |        |         | 300,332 | 
|                                     |                                                                          |                                           |        |                    |         |      |        |         |        
|Operating Costs and Expenses:        |                                                                          |                                           |        |                    |         |      |        |        
|                                     | Cost of natural gas sales                                                |                                           |        | 159,587            |         |      |        | 87,471  |        
|                                     | Cost of natural gas transportation                                       |                                           |        | 4,705              |         |      |        | 9,245   |        
|                                     | Operation and maintenance                                                |                                           |        | 45,329             |         |      |        | 46,130  |        
|                                     | Administrative and general                                               |                                           |        | 28,752             |         |      |        | 29,767  |        
|                                     | Depreciation and amortization                                            |                                           |        | 48,053             |         |      |        | 46,028  |        
|                                     | Taxes - other than income taxes                                          |                                           |        | 10,855             |         |      |        | 11,173  |        
|                                     | Other                                                                    |                                           |        | 76                 |         |      |        | 1,133   |        
|                                     |                                                                          |                                           |        |                    |         |      |        |         |        
|                                     |                                                                          | Total operating costs and expenses        |        |                    | 297,357 |      |        |         | 230,947 | 
|                                     |                                                                          |                                           |        |                    |         |      |        |         |        
|Operating Income                     |                                                                          |                                           | 99,918 |                    |         |      | 69,385 |        
|                                     |                                                                          |                                           |        |                    |         |      |        |         |        
|Other (Income) and Other Deductions: |                                                                          |                                           |        |                    |         |      |        |        
|                                     | Interest expense                                                         |                                           |        | 22,142             |         |      |        | 20,666  |        
|                                     | Interest income  affiliates                                             |                                           |        | (2,066             | )       |      |        | (2,750  | )      
|                                     | Allowance for equity and borrowed funds used during construction (AFUDC) |                                           |        | (5,521             | )       |      |        | (6,314  | )      
|                                     | Equity in earnings of unconsolidated affiliates                          |                                           |        | (1,845             | )       |      |        | (1,951  | )      
|                                     | Miscellaneous other (income) deductions, net                             |                                           |        | (1,894             | )       |      |        | (3,875  | )      
|                                     |                                                                          |                                           |        |                    |         |      |        |         |        
|                                     |                                                                          | Total other (income) and other deductions |        |                    | 10,816  |      |        |         | 5,776   | 
|                                     |                                                                          |                                           |        |                    |         |      |        |         |        
|Income before Income Taxes           |                                                                          |                                           | 89,102 |                    |         |      | 63,609 |        
|Provision for Income Taxes           |                                                                          |                                           | 34,169 |                    |         |      | 24,562 |        
|                                     |                                                                          |                                           |        |                    |         |      |        |         |        
|Net Income                           |                                                                          | $                                         | 54,933 |                    |         | $    | 39,047 |        
|                                     |                                                                          |                                           |        |                    |         |      |        |         |        

See accompanying notes.

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TRANSCONTINENTAL GAS PIPE LINE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET
(Thousands of Dollars)
(Unaudited)

|                                                           |                                                |                                          |         |           |           |              |         |           |           | 
|---------------------------------------------------------- | ---------------------------------------------- | ---------------------------------------- | ------- | --------- | --------- | ------------ | ------- | --------- | --------- | 
|                                                           |                                                |                                          |         | March 31, |           | December 31,
|                                                           |                                                |                                          |         | 2003      |           | 2002        
|                                                           |                                                |                                          |         |           |           |             
|                                                           |                                                | ASSETS                                   |         |           |           |              |         |           |           | 
|Current Assets:                                            |                                                |                                          |         |           |           |              |         |          
|                                                           | Cash                                           |                                          | $       | 271       |           |              | $       | 6,183     |          
|                                                           | Receivables:                                   |                                          |         |           |           |              |         |           |          
|                                                           |                                                | Affiliates                               |         |           | 11,126    |              |         |           | 23,725    | 
|                                                           |                                                | Advances to affiliates                   |         |           | 70,410    |              |         |           | 136,147   | 
|                                                           |                                                | Others                                   |         |           | 97,003    |              |         |           | 129,280   | 
|                                                           | Transportation and exchange gas receivables    |                                          |         | 14,943    |           |              |         | 10,362    |          
|                                                           | Inventories                                    |                                          |         | 92,540    |           |              |         | 78,876    |          
|                                                           | Deferred income taxes                          |                                          |         | 26,362    |           |              |         | 25,465    |          
|                                                           | Other                                          |                                          |         | 19,402    |           |              |         | 16,039    |          
|                                                           |                                                |                                          |         |           |           |              |         |           |          
|                                                           |                                                | Total current assets                     |         |           | 332,057   |              |         |           | 426,077   | 
|                                                           |                                                |                                          |         |           |           |              |         |           |          
|Investments, at cost plus equity in undistributed earnings |                                                |                                          | 43,310  |           |           |              | 43,368  |          
|                                                           |                                                |                                          |         |           |           |              |         |           |          
|Property, Plant and Equipment:                             |                                                |                                          |         |           |           |              |         |          
|                                                           | Natural gas transmission plant                 |                                          |         | 5,643,881 |           |              |         | 5,602,497 |          
|                                                           | Less-Accumulated depreciation and amortization |                                          |         | 1,325,420 |           |              |         | 1,313,142 |          
|                                                           |                                                |                                          |         |           |           |              |         |           |          
|                                                           |                                                | Total property, plant and equipment, net |         |           | 4,318,461 |              |         |           | 4,289,355 | 
|                                                           |                                                |                                          |         |           |           |              |         |           |          
|Other Assets                                               |                                                |                                          | 223,451 |           |           |              | 210,732 |          
|                                                           |                                                |                                          |         |           |           |              |         |           |          
|                                                           |                                                | Total assets                             |         | $         | 4,917,279 |              |         | $         | 4,969,532 | 
|                                                           |                                                |                                          |         |           |           |              |         |           |          

See accompanying notes.

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TRANSCONTINENTAL GAS PIPE LINE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
(Thousands of Dollars)
(Unaudited)

|                                                |                                                    |                                               |           |           |           |              |           |           |           | 
|----------------------------------------------- | -------------------------------------------------- | --------------------------------------------- | --------- | --------- | --------- | ------------ | --------- | --------- | --------- | 
|                                                |                                                    |                                               |           | March 31, |           | December 31,
|                                                |                                                    |                                               |           | 2003      |           | 2002        
|                                                |                                                    |                                               |           |           |           |             
|                                                |                                                    | LIABILITIES AND STOCKHOLDERS EQUITY          |           |           |           |              |           |           |           | 
|Current Liabilities:                            |                                                    |                                               |           |           |           |              |           |          
|                                                | Payables:                                          |                                               |           |           |           |              |           |           |          
|                                                |                                                    | Affiliates                                    |           | $         | 31,682    |              |           | $         | 58,718    | 
|                                                |                                                    | Advances from affiliates                      |           |           | 2,428     |              |           |           | 3,022     | 
|                                                |                                                    | Other                                         |           |           | 90,962    |              |           |           | 102,976   | 
|                                                | Transportation and exchange gas payables           |                                               |           | 16,728    |           |              |           | 10,605    |          
|                                                | Accrued liabilities                                |                                               |           | 130,231   |           |              |           | 146,671   |          
|                                                | Reserve for rate refunds                           |                                               |           | 10,980    |           |              |           | 9,247     |          
|                                                |                                                    |                                               |           |           |           |              |           |           |           | 
|                                                |                                                    | Total current liabilities                     |           |           | 283,011   |              |           |           | 331,239   | 
|                                                |                                                    |                                               |           |           |           |              |           |           |           | 
|Long-Term Debt                                  |                                                    |                                               | 1,123,335 |           |           |              | 1,123,136 |          
|                                                |                                                    |                                               |           |           |           |              |           |           |           | 
|Other Long-Term Liabilities:                    |                                                    |                                               |           |           |           |              |           |          
|                                                | Deferred income taxes                              |                                               |           | 918,237   |           |              |           | 903,814   |          
|                                                | Other                                              |                                               |           | 146,095   |           |              |           | 134,830   |          
|                                                |                                                    |                                               |           |           |           |              |           |           |           | 
|                                                |                                                    | Total other long-term liabilities             |           |           | 1,064,332 |              |           |           | 1,038,644 | 
|                                                |                                                    |                                               |           |           |           |              |           |           |           | 
|Contingent liabilities and commitments (Note 2) |                                                    |                                               |           |           |           |              |           |          
|Common Stockholders Equity:                    |                                                    |                                               |           |           |           |              |           |          
|                                                | Common stock $1.00 par value:                      |                                               |           |           |           |              |           |           |          
|                                                |                                                    | 100 shares authorized, issued and outstanding |           |           |          |              |           |           |          | 
|                                                | Premium on capital stock and other paid-in capital |                                               |           | 1,652,430 |           |              |           | 1,652,430 |          
|                                                | Retained earnings                                  |                                               |           | 803,056   |           |              |           | 833,123   |          
|                                                | Accumulated other comprehensive loss               |                                               |           | (8,885    | )         |              |           | (9,040    | )        
|                                                |                                                    |                                               |           |           |           |              |           |           |           | 
|                                                |                                                    | Total common stockholders equity             |           |           | 2,446,601 |              |           |           | 2,476,513 | 
|                                                |                                                    |                                               |           |           |           |              |           |           |           | 
|                                                |                                                    | Total liabilities and stockholders equity    |           | $         | 4,917,279 |              |           | $         | 4,969,532 | 
|                                                |                                                    |                                               |           |           |           |              |           |           |           | 

See accompanying notes.

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TRANSCONTINENTAL GAS PIPE LINE CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)

|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                    |          |          |   |         |          |  
|-------------------------------------------------- | ------------------------------ | ------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | --------------------------------------------------- | - | ------------------ | -------- | -------- | - | ------- | -------- | -
|                                                   |                                |                                                                                             |                                                                    |                                                     |   | Three Months Ended
|                                                   |                                |                                                                                             |                                                                    |                                                     |   | March 31,         
|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                   
|                                                   |                                |                                                                                             |                                                                    |                                                     |   | 2003               |          | 2002    
|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                    |          |         
|Cash flows from operating activities:              |                                |                                                                                             |                                                                    |                                                     |   |                    |          |         
|                                                   | Net income                     |                                                                                             | $                                                                  | 54,933                                              |   |                    | $        | 39,047   |  
|                                                   |                                | Adjustments to reconcile net income to net cash provided
by (used in) operating activities: |                                                                    |                                                     |   |                    |          |          |   |        
|                                                   |                                |                                                                                             | Depreciation and amortization                                      |                                                     |   | 47,982             |          |          |   | 46,761  |         
|                                                   |                                |                                                                                             | Deferred income taxes                                              |                                                     |   | 13,430             |          |          |   | (17,030 | )       
|                                                   |                                |                                                                                             | Allowance for equity funds used during construction (Equity AFUDC) |                                                     |   | (3,985             | )        |          |   | (4,686  | )       
|                                                   |                                |                                                                                             | Changes in operating assets and liabilities:                       |                                                     |   |                    |          |          |   |         |         
|                                                   |                                |                                                                                             |                                                                    | Receivables                                         |   |                    | 39,441   |          |   |         | 70,660   |  
|                                                   |                                |                                                                                             |                                                                    | Transportation and exchange gas receivables         |   |                    | (4,581   | )        |   |         | (2,216   | )
|                                                   |                                |                                                                                             |                                                                    | Inventories                                         |   |                    | (13,664  | )        |   |         | 1,226    |  
|                                                   |                                |                                                                                             |                                                                    | Payables                                            |   |                    | (13,210  | )        |   |         | (1,871   | )
|                                                   |                                |                                                                                             |                                                                    | Transportation and exchange gas payables            |   |                    | 6,123    |          |   |         | (1,679   | )
|                                                   |                                |                                                                                             |                                                                    | Accrued liabilities                                 |   |                    | (16,316  | )        |   |         | 24,788   |  
|                                                   |                                |                                                                                             |                                                                    | Reserve for rate refunds                            |   |                    | 1,733    |          |   |         | 39,639   |  
|                                                   |                                |                                                                                             |                                                                    | Other, net                                          |   |                    | (16,013  | )        |   |         | 772      |  
|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                    |          |          |  
|                                                   |                                |                                                                                             |                                                                    | Net cash provided by operating activities           |   |                    | 95,873   |          |   |         | 195,411  |  
|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                    |          |          |  
|Cash flows from financing activities:              |                                |                                                                                             |                                                                    |                                                     |   |                    |          |         
|                                                   | Debt issue costs               |                                                                                             |                                                                    | (56                                                 | ) |                    |          | (101     | )
|                                                   | Change in cash overdrafts      |                                                                                             |                                                                    | (25,510                                             | ) |                    |          | (5,106   | )
|                                                   | Common stock dividends paid    |                                                                                             |                                                                    | (85,000                                             | ) |                    |          |         |  
|                                                   | Advances from affiliate, net   |                                                                                             |                                                                    | (594                                                | ) |                    |          | (1,511   | )
|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                    |          |          |  
|                                                   |                                |                                                                                             |                                                                    | Net cash used in financing activities               |   |                    | (111,160 | )        |   |         | (6,718   | )
|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                    |          |          |  
|Cash flows from investing activities:              |                                |                                                                                             |                                                                    |                                                     |   |                    |          |         
|                                                   | Property, plant and equipment: |                                                                                             |                                                                    |                                                     |   |                    |          |          |  
|                                                   |                                |                                                                                             | Additions, net of equity AFUDC                                     |                                                     |   | (63,568            | )        |          |   | (79,839 | )       
|                                                   |                                |                                                                                             | Changes in accounts payable                                        |                                                     |   | (329               | )        |          |   | (8,011  | )       
|                                                   | Advances to affiliates, net    |                                                                                             |                                                                    | 71,172                                              |   |                    |          | (100,548 | )
|                                                   | Other, net                     |                                                                                             |                                                                    | 2,100                                               |   |                    |          | (323     | )
|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                    |          |          |  
|                                                   |                                |                                                                                             |                                                                    | Net cash provided by (used in) investing activities |   |                    | 9,375    |          |   |         | (188,721 | )
|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                    |          |          |  
|Net decrease in cash                               |                                |                                                                                             | (5,912                                                             | )                                                   |   |                    | (28      | )       
|Cash at beginning of period                        |                                |                                                                                             | 6,183                                                              |                                                     |   |                    | 472      |         
|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                    |          |          |  
|Cash at end of period                              |                                | $                                                                                           | 271                                                                |                                                     |   | $                  | 444      |         
|                                                   |                                |                                                                                             |                                                                    |                                                     |   |                    |          |          |  
|Supplemental disclosures of cash flow information: |                                |                                                                                             |                                                                    |                                                     |   |                    |          |         
|                                                   | Cash paid during the year for: |                                                                                             |                                                                    |                                                     |   |                    |          |          |  
|                                                   |                                |                                                                                             | Interest (exclusive of amount capitalized)                         |                                                     | $ | 34,130             |          |          | $ | 24,690  |         
|                                                   |                                |                                                                                             | Income taxes paid                                                  |                                                     |   | 15,199             |          |          |   | 14,724  |         

See accompanying notes.

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TRANSCONTINENTAL GAS PIPE LINE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Transcontinental Gas Pipe Line Corporation (Transco) is a wholly-owned
subsidiary of Williams Gas Pipeline Company, LLC (WGP). WGP is a wholly-owned
subsidiary of The Williams Companies, Inc. (Williams).

Transcos Board of Directors declared a cash dividend on common stock in
the amount of $85 million on March 31, 2003.

The condensed consolidated financial statements include the accounts of
Transco and its majority-owned subsidiaries. Companies in which Transco and its
subsidiaries own 20 percent to 50 percent of the voting common stock or
otherwise exercise significant influence over operating and financial policies
of the company are accounted for under the equity method.

The condensed consolidated financial statements have been prepared from
the books and records of Transco. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States have been
condensed or omitted. The condensed unaudited consolidated financial statements
include all adjustments both normal recurring and others which, in the opinion
of Transcos management, are necessary to present fairly its financial position
at March 31, 2003, and results of operations for the three months ended March
31, 2003 and 2002, and cash flows for the three months ended March 31, 2003 and
2002. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in Transcos 2002 Annual Report on Form 10-K.

Through an agency agreement, Williams Energy Marketing & Trading Company
(WEM&T), an affiliate of Transco, manages all jurisdictional merchant gas sales
of Transco, receives all margins associated with such business and, as
Transcos agent, assumes all market and credit risk associated with Transcos
jurisdictional merchant gas sales. Consequently, Transcos merchant gas sales
service has no impact on its operating income or results of operations. For a
discussion of a recent settlement with the Federal Energy Regulatory Commission
(FERC) affecting Transcos jurisdictional merchant gas sales, see Note 2.
Contingent Liabilities and Commitments.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Actual results could differ from
those estimates. Estimates and assumptions which, in the opinion of management,
are significant to the underlying amounts included in the financial statements
and for which it would be reasonably possible that future events or information
could change those estimates include: 1) revenues subject to refund; 2)
litigation-related contingencies; 3) environmental remediation obligations; and
4) impairment assessments of long-lived assets.

Comprehensive income for the three months ended March 31, 2003 and 2002
respectively, are as follows (in thousands):

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|                                                          |  |                 |        |      |  |   |        | 
|--------------------------------------------------------- |  | --------------- | ------ | ---- |  | - | ------ | 
|                                                          |  | Three Months   
|                                                          |  | Ended March 31,
|                                                          |  |                
|                                                          |  | 2003            |        | 2002
|                                                          |  |                 |        |     
|Net income                                                |  | $               | 54,933 |      |  | $ | 39,047 | 
|Equity interest in unrealized gain on interest rate hedge |  |                 | 155    |      |  |   | 189    | 
|                                                          |  |                 |        |      |  |   |        | 
|Total comprehensive income                                |  | $               | 55,088 |      |  | $ | 39,236 | 
|                                                          |  |                 |        |      |  |   |        | 

Change in accounting policyEffective January 1, 2003, Williams and its
subsidiaries, including Transco, adopted Statement of Financial Accounting
Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations. The
statement requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made, and that the associated asset retirement
costs be capitalized as part of the carrying amount of the long-lived asset.
As required by the new rules, Transco recorded liabilities equal to the present
value of expected future asset retirement obligations at January 1, 2003. The
obligations relate to offshore transmission platforms. At the end of the
useful life of each respective asset, Transco is legally obligated to dismantle
offshore transmission platforms. The liabilities are partially offset by
increases in net assets, net of accumulated depreciation, recorded as if the
provisions of the statement had been in effect at the date the obligation was
incurred. As a result of the adoption of SFAS No. 143, Transco recorded a
long-term liability of $10.8 million and property, plant and equipment, net of
accumulated depreciation, of $1.1 million. Transco also recorded a $9.7
million regulatory asset for the cumulative effect of adopting SFAS No. 143,
which is expected to be recovered through regulated rates. Transco has not
recorded liabilities for pipeline transmission assets and gas gathering
systems. A reasonable estimate of the fair value of the retirement obligations
for these assets cannot be made as the remaining life of these assets is not
currently determinable. Had the statement been adopted at the beginning of
2002, the impact to Transcos operating income and net income would have been
immaterial.

Certain reclassifications have been made in the 2002 financial statements
to conform to the 2003 presentation.

2. CONTINGENT LIABILITIES AND COMMITMENTS

Rate and Regulatory Matters

FERC settlementOn December 11, 2002, the FERC staff informed Transco of a
number of issues the FERC staff identified during the course of a formal,
nonpublic investigation into the relationship between Transco and its marketing
affiliate, WEM&T. The FERC staff asserted that WEM&T personnel had access to
Transco data bases and other information, and that Transco had failed to
accurately post certain information on its electronic bulletin board.
Williams, Transco and WEM&T did not agree with all of the FERC staffs
allegations and furthermore believe that WEM&T did not profit from the alleged
activities. Nevertheless, in order to avoid protracted litigation, on March
13, 2003, Williams, Transco and WEM&T executed a settlement of this matter with
the FERC staff. An order approving the settlement was issued by the FERC on
March 17, 2003. No requests for rehearing of the March 17, 2003 order were
filed; therefore, the order became final on April 16, 2003. Pursuant to the
terms of the settlement agreement, Transco will pay a civil penalty in the
amount of $20 million, beginning with a payment of $4 million within thirty
(30) days of the date the FERC order approving the settlement became final. The
first payment is due by May 16, 2003, and the subsequent $4 million payments
are due on or before the first, second, third and fourth anniversaries of the
first payment. Transco recorded a charge to income and established a liability
of $17 million in the fourth quarter of 2002 on a discounted basis to reflect
the future payments to be made over the next four years. In addition, Transco
has provided notice to its merchant sales service customers that it will

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be terminating such services when it is able to do so under the terms
of any applicable contracts and FERC certificates authorizing such services.
Most of these sales are made through a Firm Sales (FS) program, and under this
program Transco must provide two-year advance notice of termination.
Therefore, Transco notified the FS customers of its intention to terminate the
FS service effective April 1, 2005. Through an agency agreement, WEM&T
receives all margins associated with jurisdictional merchant gas sales business
and, as Transcos agent, assumes all market and credit risk associated with
Transcos jurisdictional merchant gas sales. Consequently, Transcos merchant
gas sales service has no impact on Transcos operating income or results of
operations and, therefore, the anticipated termination of such service,
pursuant to the terms of the FERC settlement discussed above, will have no
impact on Transcos operating income or results of operations. As part of the
settlement, WEM&T has agreed, subject to certain exceptions, that it will not
enter into new transportation agreements that would increase the transportation
capacity it holds on certain affiliated interstate gas pipelines, including
Transco. Finally, Transco and certain affiliates have agreed to the terms of a
compliance plan designed to ensure future compliance with the provisions of the
settlement agreement and the FERCs rules governing the relationship of Transco
and WEM&T.

General rate case (Docket No. RP01-245)On March 1, 2001, Transco
submitted to the FERC a general rate filing principally designed to recover
costs associated with an increase in rate base resulting from additional plant,
an increase in rate of return and related taxes, and an increase in operation
and maintenance expenses. The filing reflected an annual cost of service
increase of approximately $227 million over the cost of service underlying the
rates reflected in the settlement of Transcos Docket No. RP97-71 rate
proceeding, as subsequently adjusted pursuant to the terms of that settlement
and FERC orders resolving issues reserved by the settlement for FERC decision.
The filing also reflected certain changes to Transcos tariff, cost allocation
and rate design methods, including, among other things, the roll-in of
Transcos Mobile Bay expansion project, and a pro forma proposal to roll-in the
costs of Transcos SunBelt, Pocono and Cherokee expansion projects.

On March 28, 2001, the FERC issued an order accepting and suspending
Transcos March 1, 2001 general rate filing to be effective September 1, 2001,
subject to refund and the outcome of a hearing.

On April 12, 2002, Transco filed a Stipulation and Agreement (Settlement)
for approval by the FERC, which resolves all cost of service, throughput and
throughput mix issues, with the exception of one cost of service issue related
to the valuation of certain right-of-way access for the installation of a fiber
optic system by a then Transco affiliate, the resolution of which is to be
applied prospectively. Issues not resolved by the Settlement are reserved for
litigation or further settlement. Such issues include various cost allocation,
rate design and tariff matters, and the cost of service issue described above.
Pursuant to the terms of the Settlement, the resolution of those issues will be
made effective prospectively, with the exception of the issue of whether the
costs of Transcos Mobile Bay expansion project should be rolled into Transcos
system rates or recovered from the Mobile Bay expansion shipper on an
incremental basis. The parties have reserved the right to argue whether the
resolution of the Mobile Bay issue should be made effective either
prospectively or retroactive to September 1, 2001. Transcos rates effective
September 1, 2001 are based on the roll-in of the costs of the Mobile Bay
expansion project. On July 23, 2002, the FERC issued an order approving the
Settlement as in the public interest, and the Settlement became effective on
October 1, 2002. In the third quarter of 2002, as a result of the FERCs
approval of the Settlement, Transco recorded additional revenues of $28
million, reduced depreciation expense by $3 million, reversed interest expense
of $0.5 million, and reduced its estimated reserve for rate refunds by $24.5
million. Rate refunds required under the Settlement totaling approximately $140
million, including interest, were paid in late November 2002. Transco
previously provided a reserve for the refunds.

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On December 3, 2002, an Administrative Law Judge (ALJ) issued his initial
decision on the issues not resolved by the Settlement. In the initial
decision, the ALJ determined that (1) no change to Transcos tariff right of
first refusal provisions is required, (2) Transco should not be required to
convert certain of its Part 157 bundled storage services to Part 284 services,
(3) Transco must modify certain of its tariff scheduling procedures for
shippers taking released capacity, (4) Transcos existing Rate Schedule GSS
bundled storage service is just and reasonable, (5) Transcos recovery of the
costs of its Mobile Bay expansion project on a rolled-in basis is unjust and
unreasonable, (6) Transcos proposal to roll-in the costs of its Cherokee,
Pocono and SunBelt projects is unjust and unreasonable, (7) Transco must modify
its tariff to establish incremental fuel and electric power charges for its
Mobile Bay expansion, Cherokee and SouthCoast projects, (8) Transcos current
allocation of storage costs to its transportation services is just and
reasonable subject to Transco including a portion of its Rate Schedule LNG
storage costs in that allocation, (9) Transco must unbundle its Emergency
Eminence Storage withdrawal service, (10) Transcos pooling point in its Rate
Zone 4 is unjust and unreasonable and Transco must adopt a paper pooling
method for that zone, (11) Transco must revise its method for the allocation of
operation and maintenance and administrative and general costs to incremental
projects, (12) Transco must revise its method for the allocation of
administrative and general costs to LNG services and (13) Transcos existing
treatment of the arrangement with its former affiliate relating to right of way
is just and reasonable. As stated above, pursuant to the terms of the
Settlement, the resolution of all of those issues are effective prospectively,
with the exception of the issue of the roll-in of the costs of Transcos Mobile
Bay expansion project, the resolution of which the parties have reserved the
right to argue should be made effective either prospectively or retroactive to
September 1, 2001. As to that issue, the ALJ determined that Transco has the
burden of establishing that roll-in of that project is just and reasonable, but
did not address the issue of any potential refunds. Transcos rates effective
September 1, 2001 are based on the roll-in of the Mobile Bay expansion project.
The ALJs initial decision is subject to review by the FERC.

General rate case (Docket No. RP97-71)On November 1, 1996, Transco
submitted to the FERC a general rate case filing principally designed to
recover costs associated with increased capital expenditures. These increased
capital expenditures primarily relate to system reliability, integrity and
Clean Air Act compliance.

When stated on a comparable basis, the rates Transco placed into effect on
May 1, 1997, subject to refund, represented an annual cost of service increase
of approximately $47 million over the cost of service underlying the rates
contained in the settlement of Transcos last general rate filing (Docket No.
RP95-197).

The filing also included (1) a pro-forma proposal to roll-in the costs of
Transcos Leidy Line and Southern expansion incremental projects and (2) a
pro-forma proposal to make interruptible transportation (IT) backhaul rates
equal to the IT forward haul rates.

On November 29, 1996, the FERC issued an order accepting Transcos filing,
suspending its effectiveness until May 2, 1997 (subsequently revised, on
rehearing, to May 1, 1997) and establishing a hearing to examine the
reasonableness of Transcos proposed rates. In addition, the order consolidated
Transcos pro forma roll-in proposal with the Phase II hearing in Docket No.
RP95-197. With the exception of the roll-in issue consolidated with Docket No.
RP95-197, which is discussed below, and one issue remanded to the FERC by the
United States Court of Appeals for the District of Columbia Circuit (D.C.
Circuit Court) relating to the rate paid by a shipper under its firm
transportation contract, all issues in this proceeding have been resolved
through settlement or litigation. As to the issue remanded to the FERC by the
D.C. Circuit, on April 14, 2003, the shipper filed a motion with the FERC
requesting expedited action on the remanded issue. The shipper requests that the FERC reinstate its
discounted transportation rate under the

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firm transportation contract effective on June 1, 2003 or as soon as possible thereafter, that Transco be directed to
make refunds of amounts collected from the shipper in excess of the discounted
rate since February 1, 2001, with interest, and that Transco be authorized to
make billing adjustments to recover the cost of the refunds from Transcos
other shippers. The shippers request is pending before the FERC.

General rate case (Docket No. RP95-197)On March 1, 1995, Transco filed
with the FERC a general rate case that proposed changes in the rates for
Transcos transportation, sales and storage service rate schedules effective
April 1, 1995. On March 31, 1995, the FERC issued an order on Transcos filing,
which accepted and suspended the tariff sheets relating to Transcos rates, to
be effective September 1, 1995, subject to refund, and established hearing
procedures. Through settlement and litigation, all issues in this proceeding
have been resolved, except certain cost allocation and rate design issues
discussed below.

A hearing concerning the cost allocation and rate design issues not
resolved by settlement concluded in November 1996. A supplemental hearing to
consider Transcos roll-in proposal filed in Docket No. RP97-71 was completed
in June 1997. On March 24, 1998, the ALJ issued an initial decision on all of
these issues. As to the main issue addressed in the decision, rolled-in
pricing, the ALJ determined that Transcos existing incremental rate treatment
must remain in effect. On April 16, 1999, the FERC issued an order reversing
the ALJ, concluding that Transco had demonstrated that its proposed rolled-in
rate treatment was just and reasonable. As a result, the FERC remanded to the
ALJ issues regarding the implementation of Transcos roll-in proposal. Several
parties filed requests for rehearing of the FERCs April 16, 1999 order, and on
March 28, 2001, the FERC issued an order denying those requests for rehearing.
On April 27, 2001, several parties filed a request for rehearing of the March
28, 2001 order, and on June 13, 2001, the FERC denied that request for
rehearing. On August 10, 2001, several parties filed a petition for review in
the D.C. Circuit Court of the FERCs April 16, 1999, March 28, 2001 and June
13, 2001 orders, and on January 17, 2003, the D.C. Circuit Court entered its
judgment denying that petition for review. On March 3, 2003, the parties filed
a petition for rehearing en banc (by all of the judges on the court) of the
D.C. Circuit Courts judgment denying their petition for review, and on March
18, 2003, the D.C. Circuit Court denied that petition for rehearing.

On April 4, 2000, the ALJ issued an initial decision on the remanded
issues relating to the implementation of Transcos roll-in proposal. The ALJ
ruled in favor of Transcos positions, with the exception of one of Transcos
proposed cost allocation changes and a requirement that the roll-in of the
costs of the incremental projects into Transcos system rates be phased in over
a three-year period. On October 12, 2001 the FERC issued an order on the ALJs
April 4, 2000 initial decision which generally upholds the decision, with the
exception of the ALJs approval of a change in the allocation of costs to a
Transco storage service and the ALJs decision to phase the roll-in of the
costs of the incremental projects into Transcos system rates. The FERC
determined that Transco must retain its existing method of allocating costs to
the storage service, and that it is not necessary to phase the roll-in of the
costs. On November 13, 2001, Transco and certain other parties each filed
requests for rehearing of the FERCs October 12, 2001 order. On April 1, 2002,
the FERC issued an order denying the requests for rehearing of the FERCs
October 12, 2001 order. On August 30, 2002, Transco filed to implement, among
other things, the FERCs decision on the roll-in of the costs of the
incremental Leidy Line and Southern expansion projects. On September 30, 2002,
the FERC issued an order that, as to roll-in, accepts Transcos filing, subject
to refund, a compliance filing and certain conditions, to be effective October
1, 2002. On December 12, 2002, the FERC issued an order accepting Transcos
compliance filing effective October 1, 2002. On January 13, 2003, certain
parties filed for rehearing of the FERCs December 12, 2002 order, arguing that
Transco improperly reallocated certain storage costs in implementing the
roll-in.

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Production area rate design (Docket Nos. RP92-137 and RP93-136)Transco
has expressed to the FERC concerns that inconsistent treatment under Order 636
of Transco and its competitor pipelines with regard to rate design and cost
allocation issues in the production area may result in rates which could make
Transco less competitive, both in terms of production-area and long-haul
transportation. A hearing before an ALJ (Docket Nos. RP92-137 and RP93-136),
dealing with, among other things, Transcos production-area rate design,
concluded in June 1994. On July 19, 1995, the ALJ issued an initial decision
finding that Transcos proposed production area rate design, and its existing
use of a system wide cost of service and allocation of firm capacity in the
production area are unjust and unreasonable. The ALJ therefore recommended that
Transco divide its costs between its production area and market area, and
permit its customers to renominate their firm entitlements.

On July 3, 1996, the FERC issued an order on review of the ALJs initial
decision concerning, among other things, Transcos production area rate design.
The FERC rejected the ALJs recommendations that Transco divide its costs
between its production area and market area, and permit its customers to
renominate their firm entitlements. The FERC also concluded that Transco may
offer firm service on its supply laterals through an open season and eliminate
its IT feeder service in favor of an interruptible service option that does not
afford shippers feeding firm transportation on Transcos production area
mainline a priority over other interruptible transportation. On December 18,
1996, the FERC denied rehearing of its July 3, 1996 Order. Several parties,
including Transco, filed petitions for review in the D.C. Circuit Court of the
FERCs orders addressing production area rate design issues. Transco
subsequently withdrew its appeal. On March 24, 2000, the D.C. Circuit Court
issued its opinion in the remaining appeal. The court determined that the FERC
failed to adequately explain its decision to reject Transcos production area
rate design proposal for its supply laterals, and remanded the case back to the
FERC for further action. In response to an order issued by the FERC on July 31,
2000, the parties submitted briefs on the issues in order to assist the FERC in
determining how best to proceed in this case. On May 31, 2001, the FERC issued
its order on remand, addressing the issues briefed by the parties. The FERC
held that Transcos firm-to-the-wellhead proposal would abrogate shipper
contracts in a manner not authorized by those contracts, and therefore rejected
the proposal. As a result, Transcos current production area rate design and
service structure remains in effect. Transco and other parties each filed a
request for rehearing of the FERCs order, and on July 27, 2001, the FERC
denied those requests. Several parties, including Transco, filed petitions for
review in the D.C. Circuit Court of the FERCs May 31 and July 27, 2001 orders.
On January 17, 2003, the D.C. Circuit Court entered its judgment on the
petitions for review and remanded the case back to the FERC for further action,
finding that the FERC had failed to adequately support its findings in
rejecting Transcos firm-to-the-wellhead proposal.

Gathering facilities spin-down order (Docket Nos. CP96-206-000 and
CP96-207-000)In February 1996, Transco filed an application with the FERC for
an order authorizing the abandonment of certain facilities located onshore and
offshore in Texas, Louisiana and Mississippi by conveyance to Williams Gas
Processing  Gulf Coast Company (Gas Processing), an affiliate of Transco. The
net book value recorded by Transco at March 31, 2003 of the facilities was
approximately $382 million. An operating loss recorded by Transco for the
quarter ended March 31, 2003 associated with the facilities was approximately
$1 million; however, such operating loss may not be representative of the
effects of the spin-down on Transcos future operating income due to various
factors, including future regulatory actions. Concurrently, Gas Processing
filed a petition for declaratory order requesting a determination that its
gathering services and rates be exempt from FERC regulation under the NGA. On
September 25, 1996, the FERC issued an order dismissing Transcos application
and Gas Processings petition for declaratory order. On October 25, 1996,
Transco and Gas Processing filed a joint request for rehearing of the FERCs
September 25 order, and in August 1997, filed a request that rehearing be expedited. On June 14,
2001, the FERC issued an order that

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denied the request for rehearing filed by
Transco and Gas Processing. Certain parties, including Transco, have filed
petitions for review of the FERCs orders in the D.C. Circuit Court.

In addition, Transco has pending with the FERC the four applications
described below seeking authorization to abandon portions of the facilities
included in the February 1996 application.

North Padre Island/Central Texas Systems Spin-down Proceeding (Docket Nos.
CP01-32 and CP01-34)In November 2000, Transco filed an application with the
FERC seeking authorization to abandon certain of Transcos offshore Texas
facilities by conveyance to Gas Processing. Gas Processing filed a
contemporaneous request that the FERC declare that the facilities sought to be
abandoned would be considered nonjurisdictional gathering facilities upon
transfer to Gas Processing. On July 25, 2001, the FERC approved the abandonment
and the non-jurisdictional treatment of all the facilities requested in the
applications of Transco and Gas Processing. Effective December 1, 2001, a
portion of the applicable facilities was spun down by Transco through a
non-cash dividend of $3.3 million, which represents the net book value of the
facilities as of that date. At March 31, 2003, the net book value of the
facilities remaining to be spun down in this proceeding was approximately $70
million including the Williams purchase price allocation pushed down to
Transco. The transfer of these facilities will not have a material impact on
Transcos results of operations and financial position. Certain parties have
filed petitions for review of the FERCs July 25, 2001 order to the D.C.
Circuit Court which have been consolidated with the appeals of the FERCs
orders in CP96-206 and CP96-207, discussed above. On November 30, 2001, Shell
Offshore, Inc. filed a complaint at the FERC against Gas Processing, Williams
Field Services Company (WFS) and Transco alleging concerted actions by these
affiliates frustrating the FERCs regulation of Transco. The alleged actions
are related to offers of gathering service by WFS and its subsidiaries with
respect to the North Padre Island facilities. By order of the FERC, the matter
was heard before an ALJ in April 2002. On June 4, 2002, the ALJ issued an
initial decision finding that the affiliates acted in concert to frustrate the
FERCs regulation of Transco and recommending that the FERC reassert
jurisdiction over the North Padre Island gathering system. Transco, WGP and
WFS believe their actions were reasonable and lawful and submitted briefs
taking exceptions to the initial decision. On September 5, 2002, the FERC
issued an order reasserting jurisdiction over that portion of the North Padre
Island facilities previously transferred to WFS. The FERC also determined an
unbundled gathering rate for service on these facilities, which is to be
collected by Transco. Transco has sought rehearing of the FERCs order. With
regard to the approval of the spin-down of the Central Texas facilities, a
Transco customer filed a complaint with the FERC in Docket No. RP02-309 seeking
the revocation of the FERCs spin-down approval. On September 5, 2002, the
FERC issued an order requiring that, upon transfer of the Central Texas
facilities, Transco acquire capacity on the transferred facilities and provide
service to the existing customer under the original terms and conditions of
service. Transco has sought rehearing of the FERCs order. The transfer of
these facilities has not been implemented.

North High Island/West Cameron Systems Spin-down Proceeding (Docket Nos.
CP01-103 and CP01-104)In March 2001, Transco filed an application with the
FERC seeking authorization to abandon certain of Transcos offshore Texas and
offshore and onshore Louisiana facilities by conveyance to Gas Processing. Gas
Processing filed a contemporaneous request that the FERC declare that the
facilities sought to be abandoned would be considered nonjurisdictional
gathering facilities upon transfer to Gas Processing. On July 25, 2001, the
FERC approved the abandonment and the non-jurisdictional treatment of a portion
of the facilities requested in the applications of Transco and Gas Processing.
On August 24, 2001, Transco and Gas Processing filed a Request for Rehearing
and Limited Stay, and on December 19, 2001, the FERC issued an Order on
Rehearing denying the requests to reclassify the remaining facilities as
non-jurisdictional gathering. Certain parties, including Transco, filed petitions for review of
the July 25 and December 19,

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2001 orders with the D.C. Circuit Court. These appeals have been consolidated with the appeals of the FERCs orders in
CP96-206 and CP96-207, discussed above. The transfer of these facilities has
not been implemented.

Central Louisiana System Spin-down Proceeding (Docket Nos. CP01-368 and
CP01-369)In May 2001, Transco filed an application with the FERC seeking
authorization to abandon certain of Transcos offshore and onshore Louisiana
facilities by conveyance to Gas Processing. Gas Processing filed a
contemporaneous request that the FERC declare that the facilities sought to be
abandoned would be considered nonjurisdictional gathering facilities upon
transfer to Gas Processing. On August 31, 2001, the FERC approved the
abandonment and the non-jurisdictional treatment of a portion of the facilities
requested in the applications of Transco and Gas Processing. On October 1,
2001, Transco and Gas Processing filed a Request for Rehearing and Limited
Stay, and on December 19, 2001, the FERC issued an Order on Rehearing denying
the request to reclassify the remaining facilities as non-jurisdictional
gathering. Certain parties filed petitions for review of the August 31 and
December 19, 2001 orders with the D.C. Circuit Court. These appeals have been
consolidated with the appeals of the FERCs orders in CP96-206 and CP96-207,
discussed above. The transfer of these facilities has not been implemented.

The net book value, at the application date, of the North High Island/West
Cameron and Central Louisiana facilities included in these two applications was
approximately $65 million including the Williams purchase price allocation
pushed down to Transco. The transfer of these facilities will not have a
material impact on Transcos results of operations and financial position.

South Texas Pipeline Facilities Abandonment Proceeding (Docket No.
CP02-141)In April 2002, Transco filed an application with the FERC seeking
authorization to abandon certain of Transcos onshore South Texas pipeline
facilities by conveyance to a non-affiliated third party intrastate entity. The
application also requested that the FERC find that, upon abandonment and
conveyance, these facilities would be considered non-jurisdictional intrastate
facilities. The net book value of the South Texas pipeline facilities as of the
date of Transcos FERC application was approximately $32 million, including the
Williams purchase price allocation pushed down to Transco. On January 29, 2003,
the FERC issued an order granting the requested authorizations, subject to the
condition that Transco, after transfer of the facilities to the third party,
acquire capacity on the transferred facilities and provide service to an
existing customer under the original terms and conditions of service. Transco
filed a request for rehearing of the January 29 order, specifically requesting
that the FERC reconsider such condition to the abandonment. In addition, the
Indicated Shippers filed a request for rehearing of the January 29 order,
challenging the FERCs finding that the abandonment is in the public interest.
On May 2, 2003, the FERC issued an order granting the Indicated Shippers
request for rehearing of the January 29 order, thereby denying Transcos
request to abandon the South Texas pipeline facilities by sale to a third
party. The transfer of these facilities would not have a material impact on
Transcos results of operations and financial position.

1999 Fuel Tracker (Docket No. TM99-6-29)On March 1, 1999, Transco made
its annual filing pursuant to its FERC Gas Tariff to recalculate the fuel
retention percentages applicable to Transcos transportation and storage rate
schedules, to be effective April 1, 1999. Included in the filing were two
adjustments that increased the estimated gas required for operations in prior
periods by approximately 8 billion cubic feet. By letter order dated March 31,
1999, the FERC accepted the filing to be effective April 1, 1999, subject to
refund and to further FERC action.

On February 23, 2000, the FERC issued an order disallowing the major
portions of the adjustments reflected in the March 1, 1999 filing. The FERC determined that Transcos
tariff does not permit those

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adjustments, and as a result, the pass through of those prior period adjustments must be determined on a case by case basis,
based on the relative equities involved. Based on its analysis of the facts in
this case, the FERC found in the February 23, 2000 order that the equities
weighed against Transco. On March 24, 2000, Transco filed a request for
rehearing of the February 23, 2000 order and on October 30, 2000, the FERC
issued an order granting rehearing. The FERC found that its decision to
disallow the adjustments amounted to a penalty that is not equitable to
Transco. The FERC therefore permits Transco to make the adjustments, but
requires Transco to collect the revenue associated with the adjustments over a
seven-year period. On November 29, 2000, several of Transcos customers jointly
filed for rehearing of the FERCs October 30 order. On November 29 and December
29, 2000, Transco filed tariff sheets and supporting documentation in
compliance with the FERCs October 30 order, and certain parties protested that
filing. On May 30, 2001, the FERC issued an order that denied the joint request
for rehearing, and on July 19, 2001, certain customers filed an appeal of the
FERCs October 30 and May 30 orders with the D.C. Circuit Court. The appeal was
dismissed in December 2002. In the second quarter of 2001, Transco recorded a
$15 million reduction in the cost of natural gas transportation and reduced the
related interest expense by $3 million to reflect the regulatory approval to
recover the cost of gas required for operations in prior periods. On October
10, 2002, the FERC issued an order rejecting Transcos November 29 and December
29, 2000 compliance filings, finding that Transco had not complied with the
October 30 order in seeking to collect the revenue (including interest)
represented by the permitted adjustments. The FERC determined that its October
30 order permits Transco only to collect the actual volumes comprising the
adjustments, and directed Transco to file tariff sheets and workpapers
reflecting the inclusion of the actual volume (amortized over seven years) of
the permitted adjustments in its recalculated fuel retention percentages
effective April 1, 1999. In the third quarter of 2002, as a result of the
FERCs October 10 order, Transco recorded $3 million of interest expense that
had been previously reduced in the second quarter of 2001. Any adjustment that
may be required to the $15 million reduction in the cost of natural gas
transportation recorded in the second quarter of 2001 is not expected to be
significant. On November 12, 2002, certain customers filed a joint request for
rehearing of the FERCs October 10 order asking that the FERC only allow
Transco to recover the value of the gas adjustment (without interest), and not
the volume of the adjustment. On December 9, 2002, Transco submitted its filing
to comply with the FERCs October 10 order, and on December 23, 2002, several
parties, including those that sought rehearing of the October 10 order, filed
protests to the December 9, 2002 compliance filing.

Notice of Proposed Rulemaking (Docket No. RM01-10-000)On September 27,
2001, the FERC issued a Notice of Proposed Rulemaking (NOPR) proposing to adopt
uniform standards of conduct for transmission providers. The proposed rules
define transmission providers as interstate natural gas pipelines and public
utilities that own, operate or control electric transmission facilities. The
proposed standards would regulate the conduct of transmission providers with
their energy affiliates. The FERC proposes to define energy affiliates broadly
to include any transmission provider affiliate that engages in or is involved
in transmission (gas or electric) transactions, or manages or controls
transmission capacity, or buys, sells, trades or administers natural gas or
electric energy or engages in financial transactions relating to the sale or
transmission of natural gas or electricity. Current rules regulate the conduct
of Transco and its natural gas marketing affiliates. The FERC invited
interested parties to comment on the NOPR. On April 25, 2002, the FERC issued
its staff analysis of the NOPR and the comments received. The staff analysis
proposes redefining the definition of energy affiliates to exclude affiliated
transmission providers. On May 21, 2002, the FERC held a public conference
concerning the NOPR and the FERC invited the submission of additional comments.
If adopted, these new standards would require the adoption of new compliance
measures by Transco which could result in increased costs to Transco.

Notice of Proposed Rulemaking (Docket No. RM02-14-000)On August 1, 2002,
the FERC issued

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a NOPR that proposes restrictions on various types of cash
management programs employed by companies in the energy industry such as
Williams and its subsidiaries, including Transco. In addition to stricter
guidelines regarding the accounting for and documentation of cash management or
cash pooling programs, the FERC proposal, if made final, would preclude public
utilities, natural gas companies and oil pipeline companies from participating
in such programs unless the parent company and its FERC-regulated affiliate
maintain investment-grade credit ratings and the FERC-regulated affiliate
maintains stockholders equity of at least 30% of total capitalization.
Williams and Transcos current credit ratings are not investment grade.
Transco participated in comments filed in this proceeding on August 28, 2002 by
the Interstate Natural Gas Association of America. On September 25, 2002, the
FERC convened a technical conference to discuss issues raised in the comments
filed by parties in this proceeding and a final rule is expected to be
promulgated by the FERC in the next several months.

Legal Proceedings

Royalty claims and litigationIn connection with Transcos renegotiations
with producers to resolve take-or-pay and other contract claims and to amend
gas purchase contracts, Transco entered into certain settlements which may
require the indemnification by Transco of certain claims for additional
royalties which the producers may be required to pay as a result of such
settlements. Transco, through its agent WEM&T, continues to purchase gas under
contracts which extend, in some cases, through the life of the associated gas
reserves. Certain of these contracts contain royalty indemnification
provisions, which have no carrying value. Transco has been made aware of
demands on producers for additional royalties and such producers may receive
other demands which could result in claims against Transco pursuant to royalty
indemnification provisions. Indemnification for royalties will depend on, among
other things, the specific lease provisions between the producer and the lessor
and the terms of the agreement between the producer and Transco. Consequently,
the potential maximum future payments under such indemnification provisions
cannot be determined.

Transco was notified by Freeport-McMoRan, Inc. (FMP) in February 1995,
that pursuant to a settlement with the Mineral Management Service (MMS) of the
MMS claim for royalties due under gas contracts between Transco and FMP which
had been modified pursuant to settlement agreements made in 1986 and 1989, FMP
was asserting a claim for indemnification of approximately $6 million,
including interest, under the excess royalty provisions of those settlement
agreements. On or about March 30, 1995, FMP filed a petition for specific
performance seeking recovery against Transco for the sums claimed under the
settlement agreements. In May 1998, FMP filed a motion for summary judgment
which Transco opposed. In September 1998, the court granted FMPs motion
finding that at least a portion of FMPs payment to the MMS was subject to
indemnification. Transco appealed the courts ruling, and in March 2000, the
appellate court reversed the trial court and remanded the case for trial, which
is now scheduled to begin in July 2003. FMPs claim, including interest
calculated through March 31, 2003, is approximately $10 million.

In August 1996, royalty owners in certain gas wells in Brooks County,
Texas, filed a lawsuit against parties producing gas from the wells, claiming
$50 million in damages for incorrectly calculated royalties since 1985. Transco
purchased gas from the wells and was also named as a defendant. In July 2000,
the lawsuit was settled. The settlement amount was funded by the defendants in
proportion to their respective working interests in the wells. Since Transco
never owned a working interest in any of the wells, it had no obligation to
participate in the funding of the settlement amount. However, in August 2000,
one defendant working-interest owner, Mobil, made a claim in the amount of $6.7
million against Transco for reimbursement of its settlement contribution and
associated legal defense costs on the basis that such amount
represented excess royalty payments under a gas purchase contract it had with
Transco. In September 2001,

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Transco was informed that Mobil filed on August 30,
2000, but did not serve, a lawsuit against Transco seeking reimbursement for
the payment made by Mobil to settle the litigation and one-half of the costs
and expenses it incurred in defense of the litigation. Transco accepted service
of the lawsuit on September 26, 2001. The case is presently in the pretrial
discovery phase and is set for trial on October 27, 2003. Mobils claim,
including interest calculated through March 31, 2003, is approximately $8
million.

In 1998, the United States Department of Justice (DOJ) informed Williams
that Jack Grynberg, an individual, had filed claims in the United States
District Court for the District of Colorado under the False Claims Act against
Williams and certain of its wholly-owned subsidiaries including Transco. Mr.
Grynberg has also filed claims against approximately 300 other energy companies
and alleges that the defendants violated the False Claims Act in connection
with the measurement, royalty valuation and purchase of hydrocarbons. The
relief sought is an unspecified amount of royalties allegedly not paid to the
federal government, treble damages, a civil penalty, attorneys fees, and
costs. On April 9, 1999, the DOJ announced that it was declining to intervene
in any of the Grynberg qui tam cases; including the action filed against the
Williams entities in the United States District Court for the District of
Colorado. On October 21, 1999, the Panel on Multi-District Litigation
transferred all of the Grynberg qui tam cases, including those filed against
Williams, to the United States District Court for the District of Wyoming for
pre-trial purposes. On October 9, 2002, the court granted a motion to dismiss
Grynbergs royalty valuation claims. Grynbergs measurement claims remain
pending against Williams and the other defendants.

On June 8, 2001, fourteen Williams entities, including Transco, were named
as defendants in a nationwide class action lawsuit which has been pending
against other defendants, generally pipeline and gathering companies, for more
than one year. The plaintiffs allege that the defendants, including the
Williams defendants, have engaged in mismeasurement techniques that distort the
heating content of natural gas, resulting in an alleged underpayment of
royalties to the class of producer plaintiffs. In September 2001, the
plaintiffs voluntarily dismissed two of the fourteen Williams entities named as
defendants in the lawsuit. In November 2001, Williams, along with other
Coordinating Defendants, filed a motion to dismiss on nonjurisdictional
grounds. In January 2002, most of the Williams defendants, along with a group
of Coordinating Defendants, filed a motion to dismiss for lack of personal
jurisdiction. On August 19, 2002, defendants motion to dismiss on
nonjurisdictional grounds was dismissed. On September 17, 2002 the plaintiffs
filed a motion for class certification. The Williams entities joined with other
defendants in contesting certification of the class. On April 10, 2003, the
court denied plaintiffs motion for class certification. The motion to dismiss
for lack of personal jurisdiction remains pending.

Environmental Matters

Transco is subject to extensive federal, state and local environmental
laws and regulations which affect Transcos operations related to the
construction and operation of its pipeline facilities. Appropriate governmental
authorities may enforce these laws and regulations with a variety of civil and
criminal enforcement measures, including monetary penalties, assessment and
remediation requirements and injunctions as to future compliance. Transcos use
and disposal of hazardous materials are subject to the requirements of the
federal Toxic Substances Control Act (TSCA), the federal Resource Conservation
and Recovery Act (RCRA) and comparable state statutes. The Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), also known as
Superfund, imposes liability, without regard to fault or the legality of the
original act, for release of a hazardous substance into the environment.
Because these laws and regulations change from time to time, practices that
have been acceptable to the industry and to the regulators have to be changed
and assessment and monitoring have to be undertaken to
determine whether those practices have damaged the environment and whether
remediation is required. Since 1989,

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Transco has had studies underway to test
certain of its facilities for the presence of toxic and hazardous substances to
determine to what extent, if any, remediation may be necessary. On the basis of
the findings to date, Transco estimates that environmental assessment and
remediation costs that will be incurred over the next five years under TSCA,
RCRA, CERCLA and comparable state statutes will total approximately $30 million
to $32 million, measured on an undiscounted basis. This estimate depends upon a
number of assumptions concerning the scope of remediation that will be required
at certain locations and the cost of remedial measures to be undertaken.
Transco is continuing to conduct environmental assessments and is implementing
a variety of remedial measures that may result in increases or decreases in the
total estimated costs. At March 31, 2003, Transco had a balance of
approximately $30 million for these estimated costs recorded in current
liabilities ($3 million) and other long-term liabilities ($27 million) in the
accompanying Condensed Consolidated Balance Sheet.

Transco considers environmental assessment and remediation costs and costs
associated with compliance with environmental standards to be recoverable
through rates, since they are prudent costs incurred in the ordinary course of
business. To date, Transco has been permitted recovery of environmental costs
incurred, and it is Transcos intent to continue seeking recovery of such
costs, as incurred, through rate filings. Therefore, these estimated costs of
environmental assessment and remediation have been recorded as regulatory
assets in current assets and other assets in the accompanying Condensed
Consolidated Balance Sheet.

Transco has used lubricating oils containing polychlorinated biphenyls
(PCBs) and, although the use of such oils was discontinued in the 1970s, has
discovered residual PCB contamination in equipment and soils at certain gas
compressor station sites. Transco has worked closely with the EPA and state
regulatory authorities regarding PCB issues, and has a program to assess and
remediate such conditions where they exist, the costs of which are included in
the $30 million to $32 million range discussed above.

Transco has been identified as a potentially responsible party (PRP) at
various Superfund and state waste disposal sites. Based on present volumetric
estimates and other factors, Transcos estimated aggregate exposure for
remediation of these sites is less than $500,000. The estimated remediation
costs for all such sites have been included in Transcos environmental reserve
discussed above. Liability under CERCLA (and applicable state law) can be joint
and several with other PRPs. Although volumetric allocation is a factor in
assessing liability, it is not necessarily determinative; thus, the ultimate
liability could be substantially greater than the amounts described above.

Transco is also subject to the federal Clean Air Act and to the federal
Clean Air Act Amendments of 1990 (1990 Amendments), which added significantly
to the existing requirements established by the federal Clean Air Act. The 1990
Amendments required that the EPA issue new regulations, mainly related to
stationary sources, air toxics, ozone non-attainment areas and acid rain.
During the last few years Transco has been acquiring all necessary permits and
installing new emission control devices required for new or modified facilities
in areas designated as non-attainment by EPA and is continuing that process.
Transco operates facilities in some areas of the country currently designated
as non-attainment and it anticipates that during 2004 the EPA may designate
additional new non-attainment areas which might impact Transcos operations.
Pursuant to non-attainment area requirements of the 1990 Amendments, and
proposed EPA rules designed to mitigate the migration of ground-level ozone
(NOx) in 22 eastern states, Transco is planning installation of air pollution
controls on existing sources at certain facilities in order to reduce NOx
emissions. Transco anticipates that additional facilities may be subject to
increased controls within five years. For many of these facilities, Transco is
developing more cost effective and innovative compressor
engine control designs. Due to the developing nature of federal and state
emission regulations, it is not

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possible to precisely determine the ultimate
emission control costs. Additionally, the EPA is expected to promulgate new
rules regarding hazardous air pollutants in 2003 and 2004, which may impose
controls in addition to the controls described above. The emission control
additions required to comply with current federal Clean Air Act requirements,
the 1990 Amendments, the hazardous air pollutant regulations, and the
individual state implementation plans for NOx reductions are estimated to cost
in the range of $300 million to $330 million. These costs may be incurred over
the next four years and will be recorded as additions to property, plant and
equipment as the facilities are added. If the EPA designates additional new
non-attainment areas in 2004, which impact Transcos operations, the cost of
additions to property, plant and equipment is expected to increase. Transco is
unable at this time to estimate with any certainty the cost of additions that
may be required to meet new regulations, although it is believed that some of
those costs are included in the ranges discussed above. Transco considers costs
associated with compliance with the environmental laws and regulations
described above to be prudent costs incurred in the ordinary course of business
and, therefore, recoverable through its rates.

Safety Matters

Proposed Pipeline Integrity RegulationsIn January 2003, the United States
Department of Transportation Office of Pipeline Safety issued a NOPR entitled
Pipeline Integrity Management in High Consequence Areas. The proposed rule
incorporates the requirements of the Pipeline Safety Improvement Act of 2002
that was enacted in December 2002. It would require gas pipeline operators to
develop integrity management programs for transmission pipelines that could
affect high consequence areas in the event of pipeline failure, including a
baseline assessment and periodic reassessments to be completed within specified
timeframes. The final rule is expected to be issued in late 2003. Transco at
this time cannot predict the exact costs that would be required under the
proposed rule. The costs of the baseline assessment are anticipated to be
incurred over the next ten years. Transco considers the costs associated with
compliance with the proposed rule to be prudent costs incurred in the ordinary
course of business and, therefore, recoverable through its rates.

Summary

Litigation, arbitration, regulatory matters and environmental matters are
subject to inherent uncertainties. Were an unfavorable ruling to occur, there
exists the possibility of a material adverse impact on the net income of the
period in which the ruling occurs. Management, including internal counsel,
currently believes that the ultimate resolution of the foregoing matters, taken
as a whole and after consideration of amounts accrued, insurance coverage,
recovery from customers or other indemnification arrangements, will not have a
materially adverse effect upon Transcos future financial position.

Other Commitments

Commitments for constructionTransco has commitments for construction and
acquisition of property, plant and equipment of approximately $38 million at
March 31, 2003 of which the majority relates to construction materials for
pipeline expansion projects.

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3. DEBT AND FINANCING ARRANGEMENTS

Williams and certain of its subsidiaries, including Transco, are parties
to a revolving credit agreement (Credit Agreement), under which Transco can
borrow up to $400 million if the funds available under the Credit Agreement
have not been borrowed by Williams or other subsidiaries. The Credit Agreement
expires in July 2005. Interest rates vary with current market conditions based
on the base rate of Citibank N.A., three-month certificates of deposit of major
United States money market banks, federal funds rate or the London Interbank Offered Rate (LIBOR). The Credit
Agreement contains restrictions which limit, under certain circumstances, the
issuance of additional debt, the attachment of liens on any assets and any
change of ownership of Transco. As a result of the completion of certain asset
sales by Williams, the commitments from participating banks in the Credit
Agreement have been reduced to $400 million as of March 31, 2003, and with
further asset sales could be reduced below that amount, but Transco will
continue to have borrowing capacity up to the lesser of $400 million or the
amount that Williams would be able to borrow to the extent the funds available
under the Credit Agreement have not been borrowed by Williams or other
participating subsidiaries or that otherwise would be required to remain
available to Williams. At March 31, 2003, the borrowing capacity available to
Transco was $400 million and Transco had no outstanding borrowings under this
agreement. Transcos pipeline assets have not been pledged to secure any
indebtedness of Williams or its other affiliates, either under the Credit
Agreement or pursuant to any other credit facility of Williams and its other
affiliates.

4. STOCK-BASED COMPENSATION

Employee stock-based awards are accounted for under Accounting Principles
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and
related interpretations. Williams fixed-plan common stock options generally do
not result in compensation expense because the exercise price of the stock
options equals the market price of the underlying stock on the date of grant.
The following table illustrates the effect on Transcos net income if Transco
had applied the fair value recognition provisions of SFAS No. 123,Accounting
for Stock-Based Compensation.

|                                                                                                                                      |  |                        |        |      |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | ---- |  | - | ------ | -
|                                                                                                                                      |  | Three months          
|                                                                                                                                      |  | Ended March 31,       
|                                                                                                                                      |  |                       
|                                                                                                                                      |  | 2003                   |        | 2002
|                                                                                                                                      |  |                        |        |     
|                                                                                                                                      |  | (Thousands of Dollars)
|Net income, as reported                                                                                                               |  | $                      | 54,933 |      |  | $ | 39,047 |  
|Add: Stock-based employee
compensation included in the
Condensed Consolidated Statement of
Income, net of related tax effects         |  |                        |       |      |  |   | 97     |  
|Deduct: Stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax
effects |  |                        | (499   | )    |  |   | (561   | )
|                                                                                                                                      |  |                        |        |      |  |   |        |  
|Pro forma net income                                                                                                                  |  | $                      | 54,434 |      |  | $ | 38,583 |  
|                                                                                                                                      |  |                        |        |      |  |   |        |  

Pro forma amounts for 2003 include compensation expense from awards made
in 2002 and 2001. Pro forma amounts for 2002 include compensation expense from
certain awards made in 1999 and compensation expense from awards made in 2002
and 2001.

Since compensation expense for stock options is recognized over the future
years vesting period for pro forma disclosure purposes and additional awards
are generally made each year, pro forma amounts may not be representative of future years amounts.

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ITEM 2. Managements Narrative Analysis of Results of Operations.

WILLIAMS RECENT EVENTS

As discussed in Transcos Form 10-K for the year ended December 31, 2002,
events in 2002 and the last half of 2001 significantly impacted Williams
operations, both past and future. On February 20, 2003, Williams outlined its
planned business strategy for the next several years which management believes
to be a comprehensive response to the events, which have impacted the energy
sector and Williams. The plan focuses on retaining a strong, but smaller,
portfolio of natural gas businesses and bolstering Williams liquidity through
more asset sales, limited levels of financing at the Williams and subsidiary
levels and additional reductions in its operating costs. The plan is designed
to provide Williams with a clear strategy to address near-term and medium-term
liquidity issues and further de-leverage the company with the objective of
returning to investment grade status by 2005, while retaining businesses with
favorable returns and opportunities for growth in the future. As part of this
plan, Williams expects to generate proceeds, net of related debt, of nearly $4
billion from asset sales during 2003 and the first quarter of 2004. During the
first quarter of 2003, Williams had received $680 million in net proceeds from
the sales of assets and businesses. In April 2003, Williams announced that it
had signed definitive agreements for the sales of other Williams assets. All
of these newly announced sales are expected to close in the second quarter.
Sales anticipated to close in the second quarter are expected to generate net
proceeds of approximately $2.0 billion. As previously announced, Williams
intends to reduce its commitment to its energy marketing and trading business,
which could be realized by entering into a joint venture with a third party or
through the sale of a portion or all of the marketing and trading portfolio.
Williams Energy Marketing and Trading (WEM&T) has sold or announced sales of
contracts totaling $215 million.

As of March 31, 2003, Williams has maturing notes payable and long-term
debt through the first quarter of 2004 totaling approximately $3.5 billion,
which includes certain contractual fees and deferred interest associated with
an underlying debt. Williams anticipates the cash on hand, the asset sales
mentioned above, additional asset sales, and refinancing of a portion of these
obligations will enable Williams to meet its liquidity needs over that period.

General

The following discussion should be read in conjunction with the
consolidated financial statements, notes and managements narrative analysis
contained in Items 7 and 8 of Transcos 2002 Annual Report on Form 10-K and
with the condensed consolidated financial statements and notes contained in
this report.

RESULTS OF OPERATIONS

Operating Income and Net Income

Transcos operating income for the three months ended March 31, 2003 was
$99.9 million compared to operating income of $69.4 million for the three
months ended March 31, 2002. Net income for the three months ended March 31,
2003 was $54.9 million compared to $39.0 million for the three months ended
March 31, 2002. The higher operating income of $30.5 million was primarily the
result of higher transportation revenues and lower cost of natural gas
transportation as discussed below. The increase in net income of $15.9 million
was attributable to the increased operating income and other items as discussed
below.

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Transportation Revenues

Transcos operating revenues related to its transportation services for
the three months ended March 31, 2003 were $202.3 million, compared to $174.5
million for the three months ended March 31, 2002. The higher transportation
revenues of $27.8 million were primarily due to increased demand revenues of
$15.7 million resulting from (1) new expansion projects (Sundance and Market
Link Phase 2, placed into service on May 1, 2002 and November 1, 2002,
respectively) and (2) approved settlement rates, implemented pursuant to the
Settlement approved on July 23, 2002, to recover costs associated with
increased rate base, rate of return and expenses contained in Transcos general
rate case (Docket No. RP01-245). In addition, transportation revenues
increased due to a higher level of reimbursable costs of $7.5 million that are
included in operating expenses and recovered in Transcos rates.

As shown in the table below, Transcos total market-area deliveries for
the three months ended March 31, 2003 increased 60.3 trillion British Thermal
Units (TBtu) (14.5%) when compared to the same period in 2002. This is
primarily the result of increased deliveries associated with new expansion
projects and colder than normal temperatures in the market area during the
first quarter of 2003. Transcos production area deliveries for the three
months ended March 31, 2003 increased 14.1 TBtu (43.0%) when compared to the
same period in 2002. This is primarily due to higher interruptible
transportation, resulting from higher deliveries to other pipelines in the
production area stimulated by strong winter loads on their systems.

As a result of a straight fixed-variable (SFV) rate design as used by
Transco, increases or decreases in firm transportation volumes in comparable
facilities have no significant impact on operating income; however, because
interruptible transportation rates have components of fixed and variable cost
recovery, increases or decreases in interruptible transportation volumes do
have an impact on operating income.

|                                            |                            |                              |      |                 |       |  |      |       |       | 
|------------------------------------------- | -------------------------- | ---------------------------- | ---- | --------------- | ----- |  | ---- | ----- | ----- | 
|                                            |                            |                              |      | Three months   
|                                            |                            |                              |      | Ended March 31,
|                                            |                            |                              |      |                
|Transco System Deliveries (TBtu)            |                            | 2003                         |      | 2002           
|                                            |                            |                              |      |                
|Market-area deliveries:                     |                            |                              |      |                 |       |  |      |      
|                                            | Long-haul transportation   |                              |      | 223.9           |       |  |      | 206.7 |      
|                                            | Market-area transportation |                              |      | 252.7           |       |  |      | 209.6 |      
|                                            |                            |                              |      |                 |       |  |      |       |      
|                                            |                            | Total market-area deliveries |      |                 | 476.6 |  |      |       | 416.3 | 
|Production-area transportation              |                            |                              | 46.9 |                 |       |  | 32.8 |      
|                                            |                            |                              |      |                 |       |  |      |       |      
|                                            |                            | Total system deliveries      |      |                 | 523.5 |  |      |       | 449.1 | 
|                                            |                            |                              |      |                 |       |  |      |       |      
|Average Daily Transportation Volumes (Tbtu) |                            |                              | 5.8  |                 |       |  | 5.0  |      
|Average Daily Firm Reserved Capacity (Tbtu) |                            |                              | 6.6  |                 |       |  | 6.1  |      

Transcos facilities are divided into eight rate zones. Five are located
in the production area and three are located in the market area. Long-haul
transportation is gas that is received in one of the production-area zones and
delivered in a market-area zone. Market-area transportation is gas that is both
received and delivered within market-area zones. Production-area transportation
is gas that is both received and delivered within production-area zones.

Sales Revenues

Transco makes jurisdictional merchant gas sales to customers pursuant to a
blanket sales certificate issued by the FERC, with most of those sales being
made through a Firm Sales (FS) program which gives

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customers the option to purchase daily quantities of gas from Transco at market-responsive prices in
exchange for a demand charge payment. For a discussion of a recent settlement
with the FERC affecting Transcos jurisdictional merchant gas sales, see Item
1. Financial Statements  Notes to Condensed Consolidated Financial Statements
 2. Contingent Liabilities and Commitments. Pursuant to the terms of this
settlement, Transco has provided notice to merchant sales customers that it
will be terminating the merchant sales service when it is able to do so under
the terms of any applicable contracts and FERC certificates authorizing such
services. Under the FS program, Transco must provide two-year advance notice of
termination. Therefore, Transco notified the FS customers of its intention to
terminate the FS service effective April 1, 2005. As part of the settlement,
WEM&T has agreed, subject to certain exceptions, that it will not enter into
new transportation agreements that would increase the transportation capacity
it holds on certain affiliated interstate gas pipelines, including Transco.
Finally, Transco and certain affiliates have agreed to the terms of an
extensive compliance plan designed to ensure future compliance with the
provisions of the settlement agreement and the FERCs rules governing the
relationship of Transco and WEM&T.

Through an agency agreement with Transco, WEM&T, an affiliate of Transco,
manages Transcos jurisdictional merchant gas sales, excluding Transcos cash
out sales in settlement of gas imbalances. The long-term purchase agreements
managed by WEM&T remain in Transcos name, as do the corresponding sales of
such purchased gas. Therefore, Transco continues to record natural gas sales
revenues and the related accounts receivable and cost of natural gas sales and
the related accounts payable for the jurisdictional merchant sales that are
managed by WEM&T. Through the agency agreement, WEM&T receives all margins
associated with jurisdictional merchant gas sales business and, as Transcos
agent, assumes all market and credit risk associated with Transcos
jurisdictional merchant gas sales. Consequently, Transcos merchant gas sales
service has no impact on Transcos operating income or results of operations
and, therefore, the anticipated termination of such service, pursuant to the
terms of the FERC settlement discussed above, will have no impact on Transcos
operating income or results of operations.

In addition to its merchant gas sales, Transco also has cash out sales,
which settle gas imbalances with shippers. The cash out sales have no impact on
Transcos operating income or results of operations.

Transcos operating revenues related to its sales services were $159.6
million for the three months ended March 31, 2003, compared to $87.5 million
for the same period in 2002. The increase was primarily due to a higher average
sales price of $6.33 per dekatherm (Dt) for the three months ending March 31,
2003, versus $2.36 per Dt for the same period of 2002.

|                         |                 |      |                 |      |  |  |      |      | 
|------------------------ | --------------- | ---- | --------------- | ---- |  |  | ---- | ---- | 
|                         |                 |      | Three months   
|                         |                 |      | Ended March 31,
|                         |                 |      |                
|Gas Sales Volumes (TBtu) |                 | 2003 |                 | 2002
|                         |                 |      |                 |     
|Long-term sales          |                 |      | 16.4            |      |  |  | 12.0 |     
|Short-term sales         |                 |      | 4.7             |      |  |  | 10.3 |     
|                         |                 |      |                 |      |  |  |      |     
|                         | Total gas sales |      |                 | 21.1 |  |  |      | 22.3 | 
|                         |                 |      |                 |      |  |  |      |     

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Storage Revenues

Transcos operating revenues related to storage services were $31.8
million for the three months ended March 31, 2003, compared to $35.4 million
for the same period in 2002. The decrease was primarily due to a change in rate
design (implementation of rolled-in rate treatment in Docket No. RP95-197) to
recover certain costs through transportation rates which were previously
recovered through certain storage rates.

Operating Costs and Expenses

Excluding the cost of natural gas sales of $159.6 million for the three
months ended March 31, 2003 and $87.5 million for the comparable period in
2002, Transcos operating expenses for the three months ended March 31, 2003,
were approximately $5.7 million lower than the comparable period in 2002. This
decrease was primarily attributable to lower cost of natural gas transportation
resulting from a reduction in fuel expense due to pricing differentials related
to volumes of gas used in operations. The decreases in operation and
maintenance expense, administrative and general expense, and other operating
costs and expenses were mostly offset by higher depreciation and amortization
expense due to the increase in property resulting from recent construction
projects.

Other Income and Other Deductions

Other income and other deductions for the three months ended March 31,
2003, resulted in $5.0 million higher deductions than the comparable period in
2002. Interest expense was higher primarily due a greater level of long-term
debt outstanding in 2003. Interest income from affiliates was lower due
primarily to lower interest rates on intercompany demand notes, which are based
on the London Interbank Offering Rate (LIBOR).

CAPITAL RESOURCES AND LIQUIDITY

Method of Financing

Transco funds its capital requirements with cash flows from operating
activities, by accessing capital markets, by repayments of funds advanced to
WGP and, if required, by borrowings under the Credit Agreement and advances
from WGP.

Transco has an effective registration statement on file with the
Securities and Exchange Commission. At March 31, 2003, $200 million of shelf
availability remains under this registration statement which may be used to
issue debt securities. Interest rates and market conditions will affect amounts
borrowed, if any, under this arrangement. Transco believes any additional
financing arrangements, if required, can be obtained from the capital markets
on terms that are commensurate with its current credit ratings.

Williams and certain of its subsidiaries, including Transco, are parties
to a revolving credit agreement (Credit Agreement), under which Transco can
borrow up to $400 million if the funds available under the Credit Agreement
have not been borrowed by Williams or other subsidiaries. The Credit Agreement
expires in July 2005. Interest rates vary with current market conditions based
on the base rate of Citibank N.A., three-month certificates of deposit of major
United States money market banks, federal funds rate or the LIBOR. The Credit
Agreement contains restrictions which limit, under certain circumstances, the
issuance of additional debt, the attachment of liens on any assets and any
change of ownership of Transco. As a result
of the completion of certain asset sales by Williams, the commitments from
participating banks in the Credit Agreement have been reduced to $400 million
as of March 31, 2003, and with further asset sales could be

23



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##### Table of Contents



reduced below that amount, but Transco will continue to have borrowing capacity up to the lesser
of $400 million or the amount that Williams would be able to borrow to the
extent the funds available under the Credit Agreement have not been borrowed by
Williams or other participating subsidiaries or that otherwise would be
required to remain available to Williams. At March 31, 2003, the borrowing
capacity available to Transco was $400 million and Transco had no outstanding
borrowings under this agreement. Transcos pipeline assets have not been
pledged to secure any indebtedness of Williams or its other affiliates, either
under the Credit Agreement or pursuant to any other credit facility of Williams
and its other affiliates.

As a participant in Williams cash management program, Transco and its
subsidiaries have advances to and from Williams through Transcos parent
company, WGP. At March 31, 2003, the advances due Transco by WGP totaled $70.4
million. The advances are represented by demand notes. The interest rate on
intercompany demand notes is the LIBOR on the first day of the month plus an
applicable margin based on Transcos current credit ratings as determined by
Moodys Investors Service and Standard & Poors. Due to recent asset sales,
anticipated asset sales in the future and available secured borrowing
facilities, Williams has indicated that it currently believes that it will
continue to have the financial resources and liquidity to repay these advances
made by WGP which in turn allows WGP to repay Transco and its subsidiaries.

On August 1, 2002, the FERC issued a NOPR that proposes restrictions on
the type of cash management program employed by Williams and its subsidiaries,
including Transco. In addition to stricter guidelines regarding the accounting
for and documentation of cash management or cash pooling programs, the FERC
proposal, if made final, would preclude public utilities, natural gas companies
and oil pipeline companies from participating in such programs unless the
parent company and its FERC-regulated affiliate maintain investment-grade
credit ratings and that the FERC-regulated affiliate maintains stockholders
equity of at least 30% of total capitalization. Williams and Transcos current
credit ratings are not investment grade. Transco participated in comments filed
in this proceeding on August 28, 2002 by the Interstate Natural Gas Association
of America. On September 25, 2002, the FERC convened a technical conference to
discuss issues raised in the comments filed by parties in this proceeding and a
final rule is expected to be promulgated by the FERC in the next several
months.

Credit Ratings

On May 2, 2003, Fitch Ratings raised Transcos credit rating on its senior
unsecured long-term debt from BB- to BB. The ratings given by the other rating
agencies have not changed during 2003 and are as follows:

|                           |  |   
|-------------------------- |  | --
|Moodys Investors Services |  | B3
|Standard & Poors          |  | B+

Capital Expenditures

As shown in the table below, Transcos capital expenditures and
investments in affiliates for the three months ended March 31, 2003 were $63.9
million, compared to $87.9 million for the three months ended March 31, 2002.

24



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|                                                      |                                                          |      |                 |      |  |   |      |      | 
|----------------------------------------------------- | -------------------------------------------------------- | ---- | --------------- | ---- |  | - | ---- | ---- | 
|                                                      |                                                          |      | Three months   
|                                                      |                                                          |      | Ended March 31,
|                                                      |                                                          |      |                
|Capital Expenditures and Investments in Affiliates    |                                                          | 2003 |                 | 2002
|                                                      |                                                          |      |                 |     
|                                                      |                                                          |      | (In Millions)  
|Market-area projects                                  |                                                          | $    | 53.5            |      |  | $ | 25.1 |     
|Supply-area projects                                  |                                                          |      | 9.1             |      |  |   | 1.8  |     
|Maintenance of existing facilities and other projects |                                                          |      | 1.3             |      |  |   | 61.0 |     
|Investment in affiliates                              |                                                          |      |                |      |  |   |     |     
|                                                      |                                                          |      |                 |      |  |   |      |     
|                                                      | Total capital expenditures and investments in affiliates |      | $               | 63.9 |  |   | $    | 87.9 | 
|                                                      |                                                          |      |                 |      |  |   |      |     

Transcos capital expenditures estimate for 2003 and future capital
projects are discussed in its 2002 Annual Report on Form 10-K. The following
describes those projects and any new projects proposed by Transco.

Momentum Expansion ProjectOn February 14, 2002, the FERC issued an order
granting a certificate of public convenience and necessity to Transco to
construct and operate the Momentum Expansion Project, an expansion of Transcos
pipeline system from Station 65 in Louisiana to Station 165 in Virginia. On
April 10, 2003, the FERC approved Transcos application to amend the
certificate to reduce the overall size of the expansion from approximately 347
MMcf/d to approximately 312 MMcf/d and to place the Momentum facilities into
service in two phases. The first phase, consisting of approximately 260
MMcf/d, was placed into service on May 1, 2003. The second phase, consisting of
approximately 52 MMcf/d, is expected to be placed into service on May 1, 2004.
The reduction in the size of the expansion reflects the termination of two
shippers under the project and the partial replacement of those shippers with
the two shippers who had subscribed to service under Transcos previously
proposed Cornerstone Expansion Project. The revised project facilities include
approximately 50 miles of pipeline looping and 45,000 horsepower of
compression. The revised capital cost of the project is estimated to be
approximately $189 million.

Trenton-Woodbury Expansion ProjectOn May 6, 2002, Transco filed an
application for FERC approval of a 49 MMcf/d expansion of Transcos
Trenton-Woodbury Line, which runs from Transcos mainline at Station 200 in
eastern Pennsylvania, around the metropolitan Philadelphia area and southern
New Jersey area, to Transcos mainline near Station 205. On September 24, 2002,
the FERC issued a Preliminary Determination on Non-Environment Issues, finding
that the project is required by the public convenience and necessity subject to
the completion of the FERCs environmental assessment of the project. On
December 24, 2002, the FERC issued a final order authorizing Transco to
construct and operate the project. Service agreements have been executed with
two shippers for the 49 MMcf/d of incremental firm transportation capacity to
be created by the expansion. The target in-service date for the project is
November 1, 2003. The project will require approximately 7 miles of pipeline
looping at a capital cost of approximately $20 million.

Other Capital Requirements and Contingencies

Transcos capital requirements and contingencies are discussed in its 2002
Annual Report on Form 10-K. Other than as described in Note 2 of the Notes to
Condensed Consolidated Financial Statements, there have been no new
developments from those described in Transcos 2002 Annual Report on Form 10-K
with regard to other capital requirements and contingencies.

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CONCLUSION

Although no assurances can be given, Transco currently believes that the
aggregate of cash flows from operating activities, supplemented, when
necessary, by repayments of funds advanced to WGP, advances or capital
contributions from Williams and borrowings under the Credit Agreement will
provide Transco with sufficient liquidity to meet its capital requirements.
When necessary, Transco also expects to access public and private markets on
terms commensurate with its current credit ratings to finance its capital
requirements.




ITEM 4. Controls and Procedures.

An evaluation of the effectiveness of the design and operation of
Transcos disclosure controls and procedures (as defined in Rule 13a-14(c) and
15d-14(c) of the Securities Exchange Act) was performed within the 90 days
prior to the filing date of this report. This evaluation was performed under
the supervision and with the participation of Transcos management, including
Transcos Senior Vice President and Vice President and Treasurer. Based upon
that evaluation, Transcos Senior Vice President and Vice President and
Treasurer concluded that these disclosure controls and procedures are
effective.

There have been no significant changes in Transcos internal controls or
other factors that could significantly affect internal controls since the
certifying officers most recent evaluation of those controls.

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PART II  OTHER INFORMATION

ITEMS 1. LEGAL PROCEEDINGS.



| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | See discussion in Note 2 of the Notes to Condensed Consolidated
Financial Statements included herein.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

|    |  |                                                                                                                                                                                                                                                                                                                 |  |                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|(a) |  | Exhibits.                                                                                                                                                                                                                                                                                                      
|    |  |                                                                                                                                                                                                                                                                                                                 |  |                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
|    |  | The following instruments are included as exhibits to
this report. Those exhibits below incorporated by reference
herein are indicated as such by the information supplied in
the parenthetical thereafter. If no parenthetical appears
after an exhibit, copies of the instrument have been included
herewith.
|    |  |                                                                                                                                                                                                                                                                                                                 |  |                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
|    |  | (10)                                                                                                                                                                                                                                                                                                            |  | Material contracts 
|    |  |                                                                                                                                                                                                                                                                                                                 |  |                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
|    |  |                                                                                                                                                                                                                                                                                                                 |  | -                   | 1 | Amendment dated March 28, 2003 to the
First Amended and Restated Credit Agreement dated October
31, 2002, as modified by the Consent and Waiver dated as
of January 22, 2003, among The Williams Companies, Inc.
Northwest Pipeline Corporation, Transcontinental Gas Pipe
Line Corporation, and Texas Gas Transmission Corporation,
the financial institutions and other Persons from time to
time party thereto, JPMorgan Chase Bank (f/k/a The Chase
Manhattan Bank) and Commerzbank AG, as Co-Syndication
Agents, Credit Lyonnais New York Branch, as Documentation
Agent, and Citicorp USA, Inc., as agent (filed as Exhibit
10.4 to The Williams Companies, Inc. Form 10-Q for the
quarter ended March 31, 2003 Commission File Number
1-4174).
|    |  |                                                                                                                                                                                                                                                                                                                 |  |                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
|    |  | (99)                                                                                                                                                                                                                                                                                                            |  | Additional exhibits
|    |  |                                                                                                                                                                                                                                                                                                                 |  |                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
|    |  |                                                                                                                                                                                                                                                                                                                 |  | -                   | 1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 by
J. Douglas Whisenant, Senior Vice President (Principal
Executive Officer) of Transcontinental Gas Pipe Line
Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |  |                                                                                                                                                                                                                                                                                                                 |  |                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
|    |  |                                                                                                                                                                                                                                                                                                                 |  | -                   | 2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 by
Richard D. Rodekohr, Vice President and Treasurer (Principal
Financial Officer) of Transcontinental Gas Pipe Line
Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |  |                                                                                                                                                                                                                                                                                                                 |  |                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
|(b) |  | Reports on Form 8-K.                                                                                                                                                                                                                                                                                           
|    |  |                                                                                                                                                                                                                                                                                                                 |  |                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
|    |  | During the first quarter of 2003, Transco filed a Form 8-K on the
following dates reporting events under the specified items: January
22, 2003 Items 5 and 7 and January 23, 2003 Items 5 and 7.                                                                                                               

27



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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

|                    |  |                                                         |  |                               
|------------------- |  | ------------------------------------------------------- |  | ------------------------------
|                    |  | TRANSCONTINENTAL GAS PIPE LINE
CORPORATION (Registrant)
|                    |  |                                                         |  |                               
|Dated: May 13, 2003 |  | By                                                      |  | /s/ Jeffrey P. Heinrichs      
|                    |  |                                                         |  |                               
|                    |  |                                                         |  | Jeffrey P. Heinrichs          
|                    |  |                                                         |  | Controller                    
|                    |  |                                                         |  | (Principal Accounting Officer)

28



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##### Table of Contents






Certifications

I, J. Douglas Whisenant, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of
Transcontinental Gas Pipe Line Corporation;                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    |  |                              
|------------------- |  | -----------------------------
|Dated: May 13, 2003 |  | By /s/ J. Douglas Whisenant  
|                    |  |                              
|                    |  | J. Douglas Whisenant         
|                    |  | Senior Vice President        
|                    |  | (Principal Executive Officer)





---



##### Table of Contents



Certifications

I, Richard D. Rodekohr, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of
Transcontinental Gas Pipe Line Corporation;                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    |  |                              
|------------------- |  | -----------------------------
|Dated: May 13, 2003 |  | By /s/ Richard D. Rodekohr   
|                    |  |                              
|                    |  | Richard D. Rodekohr          
|                    |  | Vice President and Treasurer 
|                    |  | (Principal Financial Officer)